UK Buy-to-Let Calculator

It depends on the area and your costs, but many landlords look for a gross yield of 5–8%. Cheaper properties in the North and Midlands tend to yield more; London and the South East yield less but have historically leant on capital growth. Yield is only half the picture — a high headline yield can still produce negative monthly cashflow once a mortgage and Section 24 tax are taken off, which is why this calculator shows both.

Section 24 is the rule, fully in force since April 2020, that stops individual landlords deducting mortgage interest from their rental income. Instead, tax is charged on the full profit and then reduced by a credit worth 20% of the interest. Basic-rate taxpayers are unaffected, but higher- and additional-rate taxpayers effectively pay tax on income that has already gone out as interest — so a mortgaged buy-to-let can be profitable on paper yet lose money each month.

It depends on the nation. In England and Northern Ireland a buy-to-let or second home pays SDLT plus a 5% surcharge on every slice — 5%, 7%, 10%, 15% and 17% — so a £250,000 purchase costs £15,000. Wales charges Land Transaction Tax on a separate higher-rate table (5% to £180k, then 8.5%, 10%, 12.5%, 15% and 17%), not the main rates plus a surcharge. Scotland charges LBTT on its own bands plus the Additional Dwelling Supplement, a flat 8% on the whole price. Purchases under £40,000 escape the additional-property charge. Pick the nation at the top of the calculator and it applies the right one.

The interest-cover ratio (ICR) is how buy-to-let lenders decide how much they will lend. They check that the monthly rent covers the mortgage interest by a margin — usually 125% for a basic-rate borrower and 145% for a higher- or additional-rate borrower — tested at a stressed rate well above the pay rate, often 5.5% to 8%. If the rent does not clear the required cover at the stress rate, the lender will cap the loan or decline it.

Rental cashflow is only part of the return. When the property rises in value that gain falls on the whole price, not just the cash you put in, so with a mortgage it is geared: at the 2% default a £250,000 property gains £5,000 a year, which against a £79,000 deposit-and-costs stake is worth far more than 2% on your money. The calculator adds your projected growth to the post-tax cashflow to show a total return on the cash invested. Set the growth rate to whatever you think is realistic — the UK long-run average is roughly 2–4% a year, but it is not guaranteed and can be negative in a downturn.

You pay CGT on the gain — the sale price less the price paid, the buying costs (stamp duty, legal fees) and any capital improvements — above the annual exempt amount, which is £3,000 for 2025/26. Residential-property gains are taxed at 18% within your remaining basic-rate band and 24% above it. For the exact figure with all reliefs, use the main CGT calculator.

A limited company (SPV) pays Corporation Tax on profits — 19% up to £50,000 and 25% above £250,000, with marginal relief in between — and can still deduct mortgage interest in full, which is why higher-rate landlords often consider it. But it brings mortgage rates that are usually higher, company running costs, and further tax on taking the money back out as dividends. Switch the ownership toggle at the top to compare the personal and company tax on the same property; this tool does not model the dividend tax on extracting the profit, so treat the company figure as pre-extraction. Whether a company is better is a question for an accountant and depends on your wider income.